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Investor Insight: Experts advise condo investors

Condos remain a preferred point of entry to Canada's real estate market. But concerns around a glut of construction in Vancouver, Toronto and other cities means that investors are seeking expert insight on where and how to buy.

In this episode of Investor Insight, CREW TV turns to the experts to identify that safer ground and how to get there. Adam Brind, an agent with Re/Max Condos - Core Assets Team, Randy Ramadhin, a broker with Century 21 - Green Realty Inc., and Marcel Greaux, the founder of the Toronto Real Estate Club, provide those insights.

Video transcript below:

Jemima Codrington: Is there a safe spot in today’s condo market or rather a correction proof spot? I am Jemima Codrington and welcome to Investor Insight on Crew TV.

Ducking for cover is easier said than done for investors in today’s condo markets. No one less than the Bank of Canada is warning that the market may be headed for a price line. Investors are understandably worried. But what can they do?

Adam Brind, Agent, Re/Max Condos, Core Assets TeamAdam Brind: Generally speaking real estate tends to be a long term play for people and if it is that, I use the advice and go into build teak buildings and the reason being is because I find that neighbourhood buildings, the ones that are low rise tend to create a community and they tend to be more in demand. They are well taken care of buildings and what they create is an eco-system within that building. What you find in the high rises that are you know primarily renter owned is that they are a bit transient. So you know neighbours don’t get to know neighbours, so it’s a, it’s tough because you know in one sense you are telling investors to invest in a building that’s not investor owned. But those usually are the best ones.

Randy Ramadhin, Broker, Century 21, Green Realty Inc.Randy Ramadhin: One of the things I am asked by buyers all the time is, “where should I be looking to buy my condominium to rent?” Downtown Toronto condos are expensive. No doubt the rents are higher, but what I use is a ratio called the rent to price ratio. Take a look at the monthly rent over the sales price. I did some numbers for early 2012, downtown Toronto, a project by a major builder, the rent to price I had calculated as 0.47%, the same builder in Scarborough for the same size condominium was 0.51%. We are looking at about a cash flow difference of $400 a month. In addition to that some really great value markets.

In new Toronto there was a project by a prominent builder, but the rent to price ratio is 0.57%. We are looking at as close to $5-600 a month more in net cash flow in those particular projects. So it really does depend where you buy, at the right price that you buy and the quality of tenant that you get to pay the rents.

Jemima Codrington: But what if you have already bought? There are many strategies that investors overlook.

Marcel Greaux, Founder, Toronto Real Estate ClubMax Greaux: There are a number of things that investors can do when the oversupply hits. Marketing is I think is going to be the key factor, the first thing you want to do is make sure you differentiate your ads. You know the one liners, it’s not just the, “one bedroom for rent.” Maybe try, “cosy one bedroom”, “come snuggle up with me”. You want to get the attention of your prospective tenant above all and above your competition. The other thing you might want to deploy is, perhaps look at furnished suites especially in the downtown core. Furnished suites can easily yield you know between $3-400 net cash flow per month and that’s the strategy we found successful with our investors and our units.

For new investors, it's easy to get overwhelmed by facts, figures, formulas, and different investment calculations. Our goal today is to demystify the most important condo investing terms that you need to know